The Bank of England cut the Base Rate to 4.25% today. Does this mean mortgage rates will come down?
For the second time this year, the Bank of England has cut the Base Rate (BBR) by 0.25% to 4.25%. This slight decrease shows the cautious approach the Bank of England is taking to prevent volatile inflation levels.
However, geopolitical conflicts and Donald Trump's return to the presidency mean we’re not quite out of the woods yet.
Trump’s impact
Trump wasted no time implementing his international tariffs, which have had one positive impact on the UK (amongst a long list of concerns). With an unpredictable US market, many investors have shifted their focus to the UK, so our Gilt rates no longer have to be so competitive. As a result, SWAP rates have fallen.
Unusually, the MPC’s decision to decrease the UK Base Rate does not follow the recent Federal Reserve decision. The Fed decided to hold rates at the level set in December 2024, citing rising uncertainty and stagflation risks caused by Trump’s tariffs as the main cause.
What a Base Rate reduction means for your mortgage rates
Fixed-rate mortgages
While many lenders have reduced their pricing over the past few weeks, today’s announcement is unlikely to trigger another round of cuts. Industry experts were unanimous in their predictions for a BBR reduction today, so lenders have already priced it in and are unlikely to make further changes. Consequently, if you’re looking to secure a new fixed-term rate, you won’t see many changes; if you’re already on a fixed rate, you will see no impact at all.
It’s important to remember that SWAP rates impact BTL mortgage rate pricing more than the Base Rate.
For more on SWAP rates, take a look at our money markets page.
Tracker and Variable mortgages
For those of you on a Base Rate tracker or your lender’s Standard Variable Rate (SVR), you can expect your monthly payments to come down. With more BBR reductions expected for this year, you’ll likely enjoy this trend for the foreseeable future.
However, if you are on your lender’s SVR, you may be able to access a more competitive fixed-rate deal. Speak to our experts to explore your mortgage options.
When will the Base Rate come down again?
We predict BBR to come down twice more this year, in June and September. Moreover, SWAP rates continue on their downward trajectory, so we can expect mortgage rates to continue to slowly soften in the coming weeks and months.
Many landlords have held off on property finance plans, hoping for a Base Rate reduction; however, now is the time to act. Plenty of lenders allow you to secure a rate from their current product set up to six months in advance and move onto a cheaper deal if one becomes available before you complete. This is a great way to navigate any unexpected mortgage market changes.
It's time to discuss your options. Speak to our expert mortgage brokers on 0345 345 6788 or submit an enquiry here.
